mortgage

Mortgage.

A mortgage, or more precisely a mortgage loan, is a long-term loan used to finance the purchase of real estate.

As the borrower, or mortgager, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property.

The interest may be calculated at either a fixed or variable rate, and the term of the loan is typically between 10 and 30 years.

While the mortgage is in force, you have the use of the property, but not the title to it. When the loan is repaid in full, the property is yours. But if you default, or fail to repay the loan, the mortgagee may exercise its lien on the property and take possession of it.

mortgage

the advance of a LOAN to a person or business (the borrower/mortgagor) by other persons or businesses, in particular financial institutions such as BUILDING SOCIETIES and COMMERCIAL BANKS (the lender/mortgagee) which is used to acquire some asset, most notably a property such as a house, office or factory. A mortgage is a form of CREDIT which is extended for a specified period of time either on fixed INTEREST terms, or more usually, given the long duration of most mortgages, on variable interest terms. See SECOND MORTGAGE.

mortgage

the advance of a LOAN to a person or business (the borrower/mortgagor) by other persons or businesses, in particular financial institutions such as BUILDING SOCIETIES and COMMERCIAL BANKS (the lender/mortgagee) that is used to acquire some asset, most notably a property such as a house, office or factory. A mortgage is a form of CREDIT that is extended for a specified period of time, either on fixed INTEREST terms or, more usually, given the long duration of most mortgages, on variable interest terms.

The asset is ‘conveyed’ by the borrower to the lender as security for the loan. The deeds giving entitlement to ownership of the property remain with the building society or bank as collateral security (against default on the loan) until it is repaid in full, when they are transferred to the mortgagor who then becomes the legal owner of the property.

mortgage

A written document that provides a lender with rights in real property as collateral for a loan.The loan itself is evidenced by a promissory note, which is a written promise to repay money on certain terms and conditions. In common language, people refer to the whole relationship with the real estate lender as a mortgage, and you will see references in writing to “mortgage interest rates.”Technically, though, the reference should be to “mortgage loan interest rates.”

• In some states, the security instrument is called a deed of trust. The property owner actually deeds the property to a third party, who holds the naked legal title in trust for the owner and will reconvey (retransfer) it when the debt has been paid in full. If there is a default and foreclosure, the trustee will convey the property to the successful bidder. Such states usually allow nonjudicial foreclosures.

• In other states, the instrument called a mortgage creates only a lien on real property. The borrower is called the mortgagor, and the lender is called the mortgagee. In order to fore- close, the lender usually has to obtain court permission to conduct a sale. These are called judicial foreclosures.

• In a very few states, called hybrid states, the instrument called a mortgage transfers legal title to the lender itself. The title is extinguished when the debt has been paid in full. The lender may take advantage of nonjudicial foreclosure.

• If foreclosure nets less money than is owed on the note with all interest and costs of collection, then the lender can usually sue the borrower in state court for the balance, called a deficiency. Exceptions occur if the note provided that it was nonrecourse, meaning without any personal liability by the borrower, or if state laws prohibit deficiency judgments for first mortgages on a consumer's principal residence.

• In some states, a debtor has a grace period after foreclosure within which to buy the prop- erty back for the amount of the winning bid price plus interest at the legal rate for that state. These rights of redemption may also be extended to junior lienholders and even unsecured creditors, who may wish to invest the money necessary for redemption because they believe they can sell at a profit and recoup their losses.

Mortgage

A written document evidencing the lien on a property taken by a lender as security for the repayment of a loan.

The term “mortgage” or “mortgage loan” is used loosely to refer both to the lien and to the loan. In most cases, they are defined in two separate documents: a mortgage and a note.

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